November 6, 2024 • 12 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Steven McClurg, CEO at Canary Capital and Chen Arad, Co-Founder and CXO of Solidus Labs, talk about the future of crypto outlook under a new presidential administration.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.
See omnystudio.com/listener for privacy information.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
This is Bloomberg Business Week with Carol Messer and Tim
Stenebek on Bloomberg Radio. Carol, the amount of money from
the crypto industry that's gone into this election has just
been staggering. Yeah, we're talking about fair Shake. It's the
political action committee which supports crypto friendly candidates from both parties.
It was poised to spend as much as well more
(00:27):
than forty million in the final weeks of the twenty
twenty four US elections, after already deploying one hundred and
forty million on dozens of congressional races nationwide. They're already
thinking about twenty twenty six. It's one of the most
powerful packs in Washington. They've now have more than thirty
million in the bank, forty eight million in commitments for
next election cycle. Yeah, we're talking about the twenty twenty
(00:48):
six midterms already.
Speaker 3 (00:49):
Yeah, it's not like there's something at stake, although we
know there is, and we know that crypto has certainly
been something that has come up among the presidential candidates.
Stephen mccluk is CEO at the digital asset focused investment
firm Canary capital and Ken. Thank you all, Rod I
wanted to say correctly, or I wanted you too. Its
co founder and chief experience officer at Solidus Labs, which
(01:11):
calls itself quote first crypto native Security and Compliance hub
tailored for digital assets. We talk a lot about crypto,
Tim and I do both joining us here in our
Bloomberg Interactive Broker studio. Let me ask Steven. Let me
start with you in terms of you, guys are digitally asset,
you're investing. How are you thinking about the elections and
(01:31):
the election outcome, and it's not just elections but potentially
congressional elections that might have some thoughts in terms of
regulatory oversight and in terms of where crypto goes. How
are you thinking about the outcomes?
Speaker 4 (01:43):
Yeah, no, thank you and thanks for having us well.
First of all, I do believe that the congressional races
are going to be more important than the presidential races
this time because right now the Senate.
Speaker 1 (01:57):
UH.
Speaker 4 (01:58):
If the Senate changes and the Senate it begins to
support crypto, particularly the Senate Banking Committee, that's the most
important thing right now. We could see a thriving crypto
industry in the US if we get some changes in
the Senate. Congress is already supportive, or the House is
already supportive. We just need to get the Senate supportive
(02:18):
as well.
Speaker 2 (02:18):
Kind I'm going to get to you in a second,
but I want to follow up Steven with you for
a minute. Why should the Senate support crypto? I mean,
people think about this from the perspective. I think, if
you're not deeply involved in the industry as an industry
that's rife with scam and grift. There are people behind
bars right now as a result of some of these
(02:38):
scams in grift, it's something that's.
Speaker 4 (02:41):
Used for.
Speaker 2 (02:43):
Buying stuff on the dark web, ransomware and the like,
why should the Senate be supporting it?
Speaker 4 (02:50):
Yeah, Well, to back up a little bit, let's just
talk about bitcoin for a moment. Bitcoin actually makes it
easy for law enforcement to track monetary trans actions. So
the FBI has has software that they track every single
movement that is made on the bitcoin network, every single wallet.
They were spoken in the folks from Chanalysis in the past. Yeah, absolutely,
(03:12):
and Chanalysis is full full of x FBI agents and
so so Bitcoin actually makes it possible to track down criminals.
But the reason why, you know, about transactions on the
dark web, and the reason why people are in jail
and the reason why people are being caught is because
of these transactions. FTX is another good example of of
(03:33):
of a massive fraud that occurred. But if people had
only looked at the chainalysis of what was going on,
they would see that not everything equated to what to
what the executives that FTS are saying. So so bitcoin
is actually really good for law enforcement in my opinion,
first of all. Second of all, as an industry, it's
(03:54):
it's it's really on the cutting edge of technology. Even
if you look like a big coin mining which essentially
data centers, a lot of those data centers are being
transformed into AI data centers, which is you know, obviously
the future after seeing some of the results today. So
we want to be leading that in the US. We
don't want it to be offshore. We don't want it
(04:14):
to be in China, we don't want it to be
in the Bahamas. We want it to be in the US.
Speaker 3 (04:18):
Ken come on in on, thanks, because I'm curious what's
at stake for you based on the election outcome?
Speaker 1 (04:22):
Right, So, first of all, I just want to agree
with Steven. I mean crypto has issues. It's a new industry.
People are still learning about it. I think that technology
is still being battle tested. There's fraud, there's scams. There
are issues, but let us not forget that those still
exist in traditional finance as well. And just to kind
of echo Stephen's points, the largest recovery of funds ever
(04:43):
in the history of the Department of Justice actually happened
thanks to bitcoin, four point one billion dollars. It was
the bitfoinix hack. A few years later they were able
to trace it despite thousands of transactions. So there are issues,
there are also a lot of opportunities, and I think
today most law enforcement I agree with Stephen you'd speak
with would tell you that it actually, you know, in
a lot of ways, provides opportunities to make finance safer,
(05:04):
automatically detect stems.
Speaker 3 (05:06):
How does it stay true to what it's supposed to
be kind of something that is not part of the
traditional establi establishment with so many different hands and layers
in it, So how does it stay true to that?
But then get the proper transparency and regulatory oversight that
many would say is necessary that the traditional you know,
financial system.
Speaker 1 (05:26):
Has already financialism has and yet you know, once every
few years we have a madeof or we have a
Lehman Brothers like just to say, you know, you know,
wherever there's money to make, some people would probably make
some bad decisions and hurt others. But you know, first
of all, you know, one of the fundamental ideas of
an asset like bitcoin, no government can print it. So
(05:48):
you know that's that's a really important fundamental idea. You know,
as an inflation hedge, et cetera. You can even today
working with centralized companies, they can support you in setting
up a wallet that is yours and they cannot control.
So there are a lot of different ways in which
this allows people already to control their money better. And
(06:08):
you know, and I'm just mentioning a few examples.
Speaker 3 (06:10):
I get the control. But where's then the oversight? Right?
If the whole idea of cryptocurrencies is this currency that is,
you know, not part of the establishment, right and kind
of cleaner in terms of the thoroughfare, if you will,
then how but then many would argue, after FTX and
SBF that we do need some oversight. It's a regulatory oversit.
(06:31):
So we're how do you mesh those two.
Speaker 1 (06:33):
So I guess I'll say a couple of things, and
I'll connect it also to the other question. You know,
first of all, from you know, if you look at FTX,
for example, a lot of people got hurt. I think
there's a very strong argument that can be made that
had it been regulated, less people would get hurt. In
New York, for example, FDx could not get a New
York license because there's a clear regulatory framework that the
(06:53):
New York Department.
Speaker 3 (06:54):
Of one of these guys were outside of the United
States rights.
Speaker 1 (06:57):
And one should ask not regulating it and instead just
looking to enforce but not regulating, which means that ultimately
Americans who want it. There are surveys ahead of the
elections that's say that thirty to forty percent of Americans
have engaged with digital assets. One out of seven of
every likely voter sees it as an important issue. There's
a question that needs to be asked that I think
people in Washington should ask themselves. By not regulating it,
(07:20):
regulating it, are you protecting Americans or are you abdicating responsibility.
N FTX is a great example for that.
Speaker 2 (07:28):
Well, speaking of regulating this, I talked to a lot
of folks who agree on one thing in the crypto industry,
and that's their universal unapproval of Gary Gensler, the SEC chairman.
I'm wondering if you think that Gary Gensler will leave
(07:48):
if Kamala Harris wins, and if so, do you think
a new SEC chair would take a different approach toward crypto.
Speaker 4 (07:57):
Yeah, I do think a new chair would take a
different approach. I was actually one of the few people
that was a fan of Gary Ginsler's.
Speaker 2 (08:05):
Really, I was, Okay, tell us why you're like the
first person I've talked to you in weeks in the
crypto community who say.
Speaker 4 (08:11):
That, Yeah, I mean so, by the way, I agree
with all the questions that you guys are asking on
regulation and oversight. This is the whole reason why I
fought for the last seven years to get a bitcoin
spotty TF And obviously it was one of the one
of the ones that launched one with Valkyrie, and but
(08:32):
if you remember, we didn't get a spot bitcoin ETF
until Gary Ginsler was the chair. Now a lot of
people will say, okay, there's a lot of other different
reasons of why that I've heard.
Speaker 2 (08:44):
I've said that on Aaron. People have pushed back, and
they've said, well, it was the lawsuits that did it,
it was the legal system that allowed it.
Speaker 4 (08:50):
Yeah, I mean the lawsuits did definitely push it over
the edge. But but Gary Ginsler has been a fan
of bitcoin all along. He's working under, you know, and
an administration that doesn't want to allow it, primarily coming
from the Senate, coming from Elizabeth Warren, who's on the
Senate Banking Committee, which is the most you know, powerful
organization in the Senate when it comes to regulating things
(09:12):
like banks and bitcoin, but and and the sec. But
I believe that Gary Ginsler has been wanting this all along,
and he's been asked to hold off. So I've I've
been a fan. We've gotten a big quarte.
Speaker 3 (09:28):
Are you a fan?
Speaker 1 (09:29):
Well, you know, I'm not going to make any predictions.
The Jewish Tom Wood says prophecies were for the full right.
But but I will remind people that when Gary Ginsler,
again to echo Steve, when Gary Ganster was appointed, the
industry celebrated. The industry thought he was a bit of
a messiah. He taught, of course, it was a professor
at MIT for blockchain. So I'll just remind people that
whoever gets appointed next, like, it gets more complicated when
(09:51):
someone is in the position. There's a lot of interests
in politics you need to cater to, you know, knowne
as a messiah. But I think there's generally I thin
I think I speak for the industry for many industry,
and I say that the general sentiment is that whoever wins,
things are going to be different after the elections. It's
in part because the crypto industry has organized and you know,
you know, you talk about all the money that crypto
(10:12):
has been pouring into this. Crypto is not making this up.
It's just joining a lot of other industries that are
doing that as well, right, But it's also it's more
than that. It's it's also that people want this. I
mentioned one out of seven likely voters according to a
survey by what do.
Speaker 3 (10:25):
They wanted for that? Because I think there's still a
debate about what exactly is it. Well, I don't see
a lot of people transacting with it.
Speaker 1 (10:31):
True, and there's still a lot of development of various
use cases and products. But I think that you know,
you know, people want to try new things, and and
also sometimes it's not necessarily the role of the government
to ask why do they want it, you know, I
think one fundamental reason why the Senate should care for
this is because it's innovation and we're trying new things.
We're challenging things that you know, the traditional financial industry.
(10:54):
I'm not saying that all of this will replace traditional finance,
but it's already pushing very you know, old incumbenty institutions
to think differently, to try differently. I don't necessarily think
all of us will be paying each other in bitcoin.
I don't think that's the point. I think the point
is giving giving opportunities to create, to offer people more
ways to engage with finance, more decentralized, less decentralized, more intermediate, less, less,
(11:20):
more disintermediated. Uh and and why do people want it?
There are a lot of different reasons. I mentioned inflation, hedge,
I mentioned just curiosity. But is that really an important question?
If the people want it?
Speaker 2 (11:31):
We only have like ten seconds left, So one word
answers from each of you. Who's better for crypto Harris
or Trump?
Speaker 4 (11:37):
Trump?
Speaker 1 (11:38):
By a mile?
Speaker 2 (11:39):
Harris or Trump.
Speaker 1 (11:40):
I'm not going to pick aside. I'm also not going
to disagree, but I will say that the industry has
to be a nonpartisan here. This is too important to
make his political. The Democrats have been catching up with
their farm attacks since Harris was nominated, and whoever wins,
they made a lot of promises that they need to
fulfill to our industry.
Speaker 3 (11:55):
Would say it also has to be global in terms
of the approach and make sure that they're working with
global leaders. Steve mclerk and Horad, thank you so much.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
This is Bloomberg Business Week with Carol Messer and Tim
Stenebek on Bloomberg Radio. Carol, the amount of money from
the crypto industry that's gone into this election has just
been staggering. Yeah, we're talking about fair Shake. It's the
political action committee which supports crypto friendly candidates from both parties.
It was poised to spend as much as well more
(00:27):
than forty million in the final weeks of the twenty
twenty four US elections, after already deploying one hundred and
forty million on dozens of congressional races nationwide. They're already
thinking about twenty twenty six. It's one of the most
powerful packs in Washington. They've now have more than thirty
million in the bank, forty eight million in commitments for
next election cycle. Yeah, we're talking about the twenty twenty
(00:48):
six midterms already.
Speaker 3 (00:49):
Yeah, it's not like there's something at stake, although we
know there is, and we know that crypto has certainly
been something that has come up among the presidential candidates.
Stephen mccluk is CEO at the digital asset focused investment
firm Canary capital and Ken. Thank you all, Rod I
wanted to say correctly, or I wanted you too. Its
co founder and chief experience officer at Solidus Labs, which
(01:11):
calls itself quote first crypto native Security and Compliance hub
tailored for digital assets. We talk a lot about crypto,
Tim and I do both joining us here in our
Bloomberg Interactive Broker studio. Let me ask Steven. Let me
start with you in terms of you, guys are digitally asset,
you're investing. How are you thinking about the elections and
(01:31):
the election outcome, and it's not just elections but potentially
congressional elections that might have some thoughts in terms of
regulatory oversight and in terms of where crypto goes. How
are you thinking about the outcomes?
Speaker 4 (01:43):
Yeah, no, thank you and thanks for having us well.
First of all, I do believe that the congressional races
are going to be more important than the presidential races
this time because right now the Senate.
Speaker 1 (01:57):
UH.
Speaker 4 (01:58):
If the Senate changes and the Senate it begins to
support crypto, particularly the Senate Banking Committee, that's the most
important thing right now. We could see a thriving crypto
industry in the US if we get some changes in
the Senate. Congress is already supportive, or the House is
already supportive. We just need to get the Senate supportive
(02:18):
as well.
Speaker 2 (02:18):
Kind I'm going to get to you in a second,
but I want to follow up Steven with you for
a minute. Why should the Senate support crypto? I mean,
people think about this from the perspective. I think, if
you're not deeply involved in the industry as an industry
that's rife with scam and grift. There are people behind
bars right now as a result of some of these
(02:38):
scams in grift, it's something that's.
Speaker 4 (02:41):
Used for.
Speaker 2 (02:43):
Buying stuff on the dark web, ransomware and the like,
why should the Senate be supporting it?
Speaker 4 (02:50):
Yeah, Well, to back up a little bit, let's just
talk about bitcoin for a moment. Bitcoin actually makes it
easy for law enforcement to track monetary trans actions. So
the FBI has has software that they track every single
movement that is made on the bitcoin network, every single wallet.
They were spoken in the folks from Chanalysis in the past. Yeah, absolutely,
(03:12):
and Chanalysis is full full of x FBI agents and
so so Bitcoin actually makes it possible to track down criminals.
But the reason why, you know, about transactions on the
dark web, and the reason why people are in jail
and the reason why people are being caught is because
of these transactions. FTX is another good example of of
(03:33):
of a massive fraud that occurred. But if people had
only looked at the chainalysis of what was going on,
they would see that not everything equated to what to
what the executives that FTS are saying. So so bitcoin
is actually really good for law enforcement in my opinion,
first of all. Second of all, as an industry, it's
(03:54):
it's it's really on the cutting edge of technology. Even
if you look like a big coin mining which essentially
data centers, a lot of those data centers are being
transformed into AI data centers, which is you know, obviously
the future after seeing some of the results today. So
we want to be leading that in the US. We
don't want it to be offshore. We don't want it
(04:14):
to be in China, we don't want it to be
in the Bahamas. We want it to be in the US.
Speaker 3 (04:18):
Ken come on in on, thanks, because I'm curious what's
at stake for you based on the election outcome?
Speaker 1 (04:22):
Right, So, first of all, I just want to agree
with Steven. I mean crypto has issues. It's a new industry.
People are still learning about it. I think that technology
is still being battle tested. There's fraud, there's scams. There
are issues, but let us not forget that those still
exist in traditional finance as well. And just to kind
of echo Stephen's points, the largest recovery of funds ever
(04:43):
in the history of the Department of Justice actually happened
thanks to bitcoin, four point one billion dollars. It was
the bitfoinix hack. A few years later they were able
to trace it despite thousands of transactions. So there are issues,
there are also a lot of opportunities, and I think
today most law enforcement I agree with Stephen you'd speak
with would tell you that it actually, you know, in
a lot of ways, provides opportunities to make finance safer,
(05:04):
automatically detect stems.
Speaker 3 (05:06):
How does it stay true to what it's supposed to
be kind of something that is not part of the
traditional establi establishment with so many different hands and layers
in it, So how does it stay true to that?
But then get the proper transparency and regulatory oversight that
many would say is necessary that the traditional you know,
financial system.
Speaker 1 (05:26):
Has already financialism has and yet you know, once every
few years we have a madeof or we have a
Lehman Brothers like just to say, you know, you know,
wherever there's money to make, some people would probably make
some bad decisions and hurt others. But you know, first
of all, you know, one of the fundamental ideas of
an asset like bitcoin, no government can print it. So
(05:48):
you know that's that's a really important fundamental idea. You know,
as an inflation hedge, et cetera. You can even today
working with centralized companies, they can support you in setting
up a wallet that is yours and they cannot control.
So there are a lot of different ways in which
this allows people already to control their money better. And
(06:08):
you know, and I'm just mentioning a few examples.
Speaker 3 (06:10):
I get the control. But where's then the oversight? Right?
If the whole idea of cryptocurrencies is this currency that is,
you know, not part of the establishment, right and kind
of cleaner in terms of the thoroughfare, if you will,
then how but then many would argue, after FTX and
SBF that we do need some oversight. It's a regulatory oversit.
(06:31):
So we're how do you mesh those two.
Speaker 1 (06:33):
So I guess I'll say a couple of things, and
I'll connect it also to the other question. You know,
first of all, from you know, if you look at FTX,
for example, a lot of people got hurt. I think
there's a very strong argument that can be made that
had it been regulated, less people would get hurt. In
New York, for example, FDx could not get a New
York license because there's a clear regulatory framework that the
(06:53):
New York Department.
Speaker 3 (06:54):
Of one of these guys were outside of the United
States rights.
Speaker 1 (06:57):
And one should ask not regulating it and instead just
looking to enforce but not regulating, which means that ultimately
Americans who want it. There are surveys ahead of the
elections that's say that thirty to forty percent of Americans
have engaged with digital assets. One out of seven of
every likely voter sees it as an important issue. There's
a question that needs to be asked that I think
people in Washington should ask themselves. By not regulating it,
(07:20):
regulating it, are you protecting Americans or are you abdicating responsibility.
N FTX is a great example for that.
Speaker 2 (07:28):
Well, speaking of regulating this, I talked to a lot
of folks who agree on one thing in the crypto industry,
and that's their universal unapproval of Gary Gensler, the SEC chairman.
I'm wondering if you think that Gary Gensler will leave
(07:48):
if Kamala Harris wins, and if so, do you think
a new SEC chair would take a different approach toward crypto.
Speaker 4 (07:57):
Yeah, I do think a new chair would take a
different approach. I was actually one of the few people
that was a fan of Gary Ginsler's.
Speaker 2 (08:05):
Really, I was, Okay, tell us why you're like the
first person I've talked to you in weeks in the
crypto community who say.
Speaker 4 (08:11):
That, Yeah, I mean so, by the way, I agree
with all the questions that you guys are asking on
regulation and oversight. This is the whole reason why I
fought for the last seven years to get a bitcoin
spotty TF And obviously it was one of the one
of the ones that launched one with Valkyrie, and but
(08:32):
if you remember, we didn't get a spot bitcoin ETF
until Gary Ginsler was the chair. Now a lot of
people will say, okay, there's a lot of other different
reasons of why that I've heard.
Speaker 2 (08:44):
I've said that on Aaron. People have pushed back, and
they've said, well, it was the lawsuits that did it,
it was the legal system that allowed it.
Speaker 4 (08:50):
Yeah, I mean the lawsuits did definitely push it over
the edge. But but Gary Ginsler has been a fan
of bitcoin all along. He's working under, you know, and
an administration that doesn't want to allow it, primarily coming
from the Senate, coming from Elizabeth Warren, who's on the
Senate Banking Committee, which is the most you know, powerful
organization in the Senate when it comes to regulating things
(09:12):
like banks and bitcoin, but and and the sec. But
I believe that Gary Ginsler has been wanting this all along,
and he's been asked to hold off. So I've I've
been a fan. We've gotten a big quarte.
Speaker 3 (09:28):
Are you a fan?
Speaker 1 (09:29):
Well, you know, I'm not going to make any predictions.
The Jewish Tom Wood says prophecies were for the full right.
But but I will remind people that when Gary Ginsler,
again to echo Steve, when Gary Ganster was appointed, the
industry celebrated. The industry thought he was a bit of
a messiah. He taught, of course, it was a professor
at MIT for blockchain. So I'll just remind people that
whoever gets appointed next, like, it gets more complicated when
(09:51):
someone is in the position. There's a lot of interests
in politics you need to cater to, you know, knowne
as a messiah. But I think there's generally I thin
I think I speak for the industry for many industry,
and I say that the general sentiment is that whoever wins,
things are going to be different after the elections. It's
in part because the crypto industry has organized and you know,
you know, you talk about all the money that crypto
(10:12):
has been pouring into this. Crypto is not making this up.
It's just joining a lot of other industries that are
doing that as well, right, But it's also it's more
than that. It's it's also that people want this. I
mentioned one out of seven likely voters according to a
survey by what do.
Speaker 3 (10:25):
They wanted for that? Because I think there's still a
debate about what exactly is it. Well, I don't see
a lot of people transacting with it.
Speaker 1 (10:31):
True, and there's still a lot of development of various
use cases and products. But I think that you know,
you know, people want to try new things, and and
also sometimes it's not necessarily the role of the government
to ask why do they want it, you know, I
think one fundamental reason why the Senate should care for
this is because it's innovation and we're trying new things.
We're challenging things that you know, the traditional financial industry.
(10:54):
I'm not saying that all of this will replace traditional finance,
but it's already pushing very you know, old incumbenty institutions
to think differently, to try differently. I don't necessarily think
all of us will be paying each other in bitcoin.
I don't think that's the point. I think the point
is giving giving opportunities to create, to offer people more
ways to engage with finance, more decentralized, less decentralized, more intermediate, less, less,
(11:20):
more disintermediated. Uh and and why do people want it?
There are a lot of different reasons. I mentioned inflation, hedge,
I mentioned just curiosity. But is that really an important question?
If the people want it?
Speaker 2 (11:31):
We only have like ten seconds left, So one word
answers from each of you. Who's better for crypto Harris
or Trump?
Speaker 4 (11:37):
Trump?
Speaker 1 (11:38):
By a mile?
Speaker 2 (11:39):
Harris or Trump.
Speaker 1 (11:40):
I'm not going to pick aside. I'm also not going
to disagree, but I will say that the industry has
to be a nonpartisan here. This is too important to
make his political. The Democrats have been catching up with
their farm attacks since Harris was nominated, and whoever wins,
they made a lot of promises that they need to
fulfill to our industry.
Speaker 3 (11:55):
Would say it also has to be global in terms
of the approach and make sure that they're working with
global leaders. Steve mclerk and Horad, thank you so much.
Hosts And Creators
Tim Stenovec
Carol Massar
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